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In addition to the monthly subscription fees, subscribers generally pay an activation fee upon connecting to ish’s
network. This activation fee is selectively waived when a subscriber is reconnecting to ish’s network, when a customer
moves into a previously connected household, or as part of periodic marketing promotions to increase ish’s new subscribers.
The following table shows ish’s standard activation fees for its basic cable programming to residential and certain business
subscribers:
Subscriber category
173
Activation Fee
(in €, excluding VAT)
Residential 28.90
Multiple-dwelling units:
1 dwelling unit 300.10
2-4 dwelling units 200.07
5 dwelling units 177.84
6-10 dwelling units 155.60
11-100 dwelling units 11.11
More than 100 dwelling units 4.44
Contract change (1) 28.90
(1) Reconnection charge if the one-time activation fee has already been paid.
ish’s Basic Cable Carriage Fees
In addition to subscription fees, ish receives carriage fees from broadcasters for the delivery of television and audio
signals via its network. Private as well as public broadcasters pay carriage fees. The underlying contracts typically have terms
on average of two to three years with automatic renewal clauses for successive one year terms. In general, carriage fees for
analog channels are charged on a monthly basis, depending on the number of ish’s subscribers. Carriage fees for basic cable
service amounted to €33.2 million or 7.8% of ish’s total revenues for the year ended December 31, 2004.
MSG, a subsidiary of KDG, has an agreement with ish and other Level 3 operators under which it administers the
collection and charging of carriage fees to certain private broadcasters with nationwide programming, allocating such fees to
the cable companies in proportion to their subscribers. This collective representation agreement is a legacy of the transitional
structure when the cable regions were formed for sale by DTAG. DTAG has recently terminated several nationwide carriage
agreements administered by MSG by the end of 2005 and has announced its intention to terminate several others by the end
of 2006. If these agreements are terminated, ish has stated that it intends to negotiate agreements with broadcasters on a
regional basis. MSG does not manage ish’s carriage fee arrangement with the public broadcasters from whom ish receives a
flat-fee for transmission of their analog and digital programming. See “—Premium cable television—ish’s premium cable
television carriage fees.”
Premium Cable Television
ish’s Current Premium Cable Television Products
Since November 18, 2003, ish has offered premium cable television products to its subscribers, including programming
that ish assembles into its premium cable television packages itself and premium cable television packages of other content
providers such as Premiere, making it the first significant Level 3 operator in Germany to offer premium cable television
services and establishing a pay-per-view alternative to Premiere. Originally, ish only offered its premium cable television to
its residential upgraded network of approximately 300,000 homes. ish has extended its premium cable television service to
those areas are being connected to its network operations center in Kerpen (“NOC”) using optical fiber as part of ish’s
AMTV replacement project. ish is currently able to offer these products to approximately 73.0% of its network. By July
2005, ish expects to offer its premium cable television programming to 100.0% of its network.
ish offers its own premium cable television services under the “ish Digital TV” brand, which enables customers to
subscribe to its premium cable television packages that are not included in the basic cable offering and to purchase single
movies on a pay-per-view basis.
ish’s foreign-language programming, marketed under the brand name “ish International TV”, and incorporated into
“ish Digital TV” in April 2005, focuses on foreign communities, including Turkish, Spanish, Portuguese, Russian, Italian and
Polish. North Rhine-Westphalia has the largest Turkish community in Germany (representing more than 33.0% of all Turkish
speakers in the country, or more than 600,000 people). Given the relatively large number of foreign nationals populating
North Rhine-Westphalia, ish has a comparatively large target market for its foreign-language programming packages.